By George A. Downey

Reverse mortgages aren’t just loans for older residents. They help keep HOA fees paid, budgets stable, and unit sales marketable. They also help avoid unnecessary legal challenges. In Massachusetts, where age is a protected class, being cooperative and proactive with reverse‑mortgage requests is a simple way to support residents and protect the community’s long‑term financial health. Condominium leadership today faces two big pressures.

1. Keeping the building “financeable” so buyers can get traditional mortgages, and

2. Keeping the association financially stable even as operating costs climb and owners feel the squeeze.

BothFHA federally insured HECMs and private proprietary programs are often overlooked tools that can help solve both challenges and why leadership should not ignore them.

Reverse mortgages help keep the project from slipping into “non‑warrantable” status

When Fannie Mae or Freddie Mac label a condo “non‑warrantable,” owners suddenly can’t sell easily, buyers struggle to get loans, and values fall. This usually happens when associations show signs of financial strain – like high delinquencies, underfunded reserves, ongoing litigation, or safety/maintenance problems.

Here’s the opportunity:
Reverse mortgages give older owners access to funds they already have (dormant home equity) making possible:

• Fewer delinquent accounts dragging down HOA financials

• Healthier reserves and more predictable budgeting

• Lower litigation risk from unpaid‑fee collections

• A better profile when lenders review the project

And because HECM approvals require HOA documentation – like appropriate insurance, budgets, and evidence of financial stability, the association aligns with many of the standards that keep the project warrantable.

Proprietary reverse mortgage lenders also check many of these same financial indicators, meaning their involvement encourages the same healthy behaviors. Their requirements are less stringent but not insured.

Reverse mortgages help owners and the association stay financially sound

Many associations underestimate how strongly reverse mortgages support their bottom line.

• With HECM (FHA) reverse mortgages:Federal rules require borrowers to keep condo/HOA fees fully paid and current, since they’re officially classified as “property charges.” HUD even lets servicers add past‑due HOA fees into repayment plans, making it easier for residents to catch up.

There’s also the LESA (Life Expectancy Set‑Aside), which functions like a built‑in reserve, so taxes, and HOA dues are automatically paid on time. Many borrowers choose this; some are required to enable owners to stay current, and the association benefits with fewer delinquencies. HECM closings also require dues to be current and may collect upcoming charges at settlement. That’s instant cash‑flow stability for the HOA.

• With proprietary reverse mortgages:Even though these products are private, they provide greater loan amounts (up to $4 million), have fewer requirements, but are not insured like the FHA HECM.

In Massachusetts, reverse mortgages can help prevent costly super‑lien situations

Massachusetts gives associations a very strong legal tool: the super‑lien under M.G.L. c.183A §6, which elevates six months of unpaid fees (plus some costs) ahead of a first mortgage. It works – but it’s still stressful, time‑consuming, and disruptive. Reverse mortgages often prevent arrears from getting to that point. When older owners have access to equity, there are fewer legal steps, less tension between neighbors, and better financial reporting for lenders reviewing the project.

Cooperation reduces scrutiny and MCAD disparate‑impact risks

This part surprises many boards: In Massachusetts, age (40+) is a protected class in housing, enforceable through the legal system, including MCAD.

If an association creates policies that make it difficult, or impossible, for older owners to use tools designed for them (like reverse mortgages), those policies could have a disparate impact on a protected group, even if the board never intended any discrimination. Massachusetts courts and MCAD consider effects, not intentions.

Examples of risky association behaviors:

• Refusing to complete lender questionnaires

• Delaying paperwork processing or charging excessive fees

• Imposing unique or burdensome requirements only on reverse‑mortgage borrowers

• Discouraging reverse mortgages outright

Being proactive and cooperative isn’t just kind – it’s smart association and risk management.

About the Author: George Downey, CRMP (NMLS ID 10239) is the Regional Senior Vice President of The Federal Savings Bank branch located at 100 Grandview Road, Suite 105, Braintree, MA 02184. Contact Mr. Downey at 781-843-5553 / Cell 617-594-3666 / gdowney@thefederalsavingsbank.com, www.thefederalsavingsbank.com/georgedowney